Navigate to Explore Hypotheses, View Visualizations and Dashboards, and Open Jupyter Notebooks:

Hypothesis 7 (Sectoral Employment Trends)

  • Hypothesis 7: “The growth rate of employment in the service sector (USSERV) is higher than in the goods-producing sector (USGOOD) over the last two decades.”
  • Rationale: The U.S. economy has been shifting towards a service-oriented economy, with a decline in manufacturing and growth in services.

PROJECT GLOSSARY:

COMING SOON – follow links to read informative blog posts:

FREDtools

The dual-axis line chart illustrates the synchronized growth rates of the service sector and goods-producing sector over time. Here’s what we observe:

  • Service Sector Growth Rate (cyan line): The service sector demonstrates more stable growth over time, with fewer fluctuations compared to the goods-producing sector. Notably, there are periods of negative growth during major recessions or economic downturns, but overall, the sector experiences steady increases.

  • Goods-Producing Sector Growth Rate (magenta line): The goods-producing sector shows much more variability, with sharper downturns during recessions. This is especially evident during periods like the 2008 financial crisis and the COVID-19 pandemic.

The comparison indicates that the service sector maintains more consistent growth, while the goods-producing sector is more vulnerable to economic shocks, leading to greater volatility.

The box plot compares the distribution of growth rates between the service and goods-producing sectors:

  • Service Sector Growth Rate (cyan): The service sector exhibits a broader range of growth rates with a median that remains positive. The spread indicates that the sector has experienced both moderate increases and occasional declines, but its overall growth is consistent.

  • Goods-Producing Sector Growth Rate (magenta): The goods-producing sector shows a narrower range but with more pronounced negative values, indicating larger declines in growth during economic downturns. The median is still positive, but there is more variability in the lower quartile, which is reflective of the sector’s susceptibility to recessions.

This suggests that while both sectors experience fluctuations, the goods-producing sector faces more extreme downturns compared to the service sector.

Mean Service Sector Growth Rate: 13.1980%

Mean Goods-Producting Sector Growth Rate: 3.8949%

This suggests that over the entire period, the service sector has been growing at a faster pace than the goods-producing sector, which aligns with the hypothesis that the U.S. economy has been shifting towards a service-oriented economy.

T-statistic: 6.26%

P-value: 4.64%

The very low p-value indicates that the difference in growth rates between the service sector and the goods-producing sector is statistically significant. This strongly supports the hypothesis that the service sector has been growing at a faster rate than the goods-producing sector over the observed period.

This result aligns with the broader economic trend of the U.S. economy shifting toward a more service-oriented structure.

 

Project Brief

This project involves a comprehensive economic analysis using data from the Federal Reserve Economic Data (FRED) database. The study focuses on identifying and testing various economic hypotheses related to employment, sectoral shifts, and broader economic trends. By leveraging historical data, the project aims to uncover patterns and relationships that can guide future economic forecasting.

One of the core hypotheses explored in this study, Hypothesis 7, investigates the growth of employment in the service sector compared to the goods-producing sector over the past two decades. The analysis considers how the U.S. economy has shifted towards a service-oriented structure, reflecting changes in employment patterns between the two sectors.

Project Info

Client : N/A (Personal Project)

Date : August 2024

Category : Economic/Financial